Ekonomski pregled, Vol. 73 No. 3, 2022.
Pregledni rad
https://doi.org/10.32910/ep.73.3.6
THE ROLE OF FAMILY CONTROL IN DETERMINING THE CAPITAL STRUCTURE: EVIDENCE FROM NONFINANCIAL LISTED FIRMS
Imran Yousaf
Seyed Alireza Athari
Dervis Kirikkaleli
Arshad Hassan
Shoaib Ali
Sažetak
This study aims to examine the effect of family control on the corporate financing decision of firms in Pakistan. This study uses the annual data of 100 non-financial firms listed at PSX for the period 2005-2012. To estimate the impact of family control on the corporate financing decision, we employ the ordinary least square (OLS) method. The findings of the univariate analysis show that a significant difference exists between family and nonfamily firms based on many characteristics of firms. Multivariate analysis results show that family firms maintain significantly high “total debt ratio” and “short-term debt ratio” compared to non-family firms. There are two reasons why family firms keep high debt ratios compared to non-family firms. First, family-owned firms do not want to dilute their ownership, and that is why they fulfill their major financing needs through debt instead of issuing new shares in the market. Second, family firms in Pakistan use extra cash flows for their private benefits. These findings reveal useful insights for investors, banks, regulators, and business families of Pakistan.
Ključne riječi
Capital structure; Family ownership; Family firm; corporate financing decision; Dilute ownership
Hrčak ID:
277903
URI
Datum izdavanja:
19.5.2022.
Posjeta: 1.451 *